Prime Minister Justin Trudeau released updated ministerial mandate letters on Friday that prioritize job creation, support for Canada’s struggling airline sector and a pledge to spend whatever is needed in the short term to get the country through the pandemic while also setting a longer-term fiscal target for federal finances.
The letters are described as “supplementary” to the ones the Prime Minister issued on Dec. 13, 2019, before the government’s policy plans were sidelined because of COVID-19.
They provide additional detail on the themes the Liberal government outlined in the September Speech from the Throne and Finance Minister Chrystia Freeland’s fall economic statement.
The letters also provide a sense of the priorities for this year’s budget, which will be the Liberals’ first since they were re-elected with a minority mandate in the fall of 2019.
“The government has significantly increased spending during the pandemic in order to achieve our most pressing priority: to help protect Canadians’ health and financial security,” Mr. Trudeau’s letters state. “... We must preserve Canada’s fiscal advantage and continue to be guided by values of sustainability and prudence.”
Before the pandemic, the projected deficit for the fiscal year that ends March 31, 2021, was $28.1-billion, with a debt-to-GDP ratio of 31 per cent. As a result of the pandemic and spending on related federal programs, the projected deficit is now $381.6-billion and the debt-to-GDP ratio will exceed 50 per cent.
Prolonged business shutdowns in Canada’s two largest provinces – Ontario and Quebec – will add further pressure on Ottawa’s bottom line as more workers turn to Employment Insurance and business owners access emergency programs such as rent support.
Some economists have expressed concern that Ottawa has not articulated a new fiscal anchor, which is a target level for federal deficits and the debt. Mr. Trudeau’s letter to Ms. Freeland addresses this point.
Mr. Trudeau asks his Finance Minister to present “a new fiscal anchor” while also stating that “you will use whatever fiscal firepower is needed in the short term to support people and businesses during the pandemic.” The Prime Minister later states that this should not create new permanent spending.
Ms. Freeland and other ministers are also being asked to “create over one million jobs, restoring employment to levels prior to the pandemic using a range of tools, including direct investments in the social sector and infrastructure, immediate training to quickly up-skill workers and incentives for employers to hire and retain workers.”
New Transport Minister Omar Alghabra, who was promoted to cabinet in Tuesday’s shuffle, is assigned to work with cabinet colleagues on measures for the air travel sector that will “ensure Canadians get refunds for air travel cancelled due to the pandemic,” while sustaining regional air infrastructure and supporting regional development and tourism.
Mr. Alghabra is asked to work with new Foreign Affairs Minister Marc Garneau on the government’s response to last January’s Ukraine International Airlines tragedy, in which Iran’s military shot down a passenger plane shortly after takeoff from Tehran, killing all 176 people on board, most of whom were Canadian or travelling to Canada.
Mr. Trudeau’s letter said the government’s response will include “commemorating the lives of the victims and supporting their families, pursuing truth and accountability from Iran, and preventing future disasters. …”
In his mandate letter to Health Minister Patty Hajdu, Mr. Trudeau noted that the country has been confronted with the most serious public health crisis it has ever faced. “The global pandemic has had devastating impacts on lives and livelihoods and exposed fundamental gaps in our society,” Mr. Trudeau wrote.
Among his requests, the Prime Minister called on Ms. Hajdu to work with the provinces and territories on setting new, national standards for long-term care.
In his letter to Indigenous Services Minister Marc Miller, the Prime Minister also flagged the need to follow through on commitments that include fulfilling the government’s pledge to end all long-term drinking water advisories on reserves.
At the beginning of December, Mr. Miller said he was taking responsibility and acknowledged the federal government would not meet its March, 2021, target to end all of the water advisories, which was a key promise in the Liberals’ 2015 election campaign.
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